Bank of New York: Sometimes CEOs Get Fired For Odd Reasons

Carly Fiorina, former Hewlett-Packard CEO and Republican candidate for U.S. Senate, gives her acceptance speech during her election night party at a hotel in Anaheim, California June 8, 2010. Photo: REUTERS

Robert Kelly, the chief executive of Bank of New York Mellon Corp. (NYSE: BK) was recently fired reportedly because of his “abrasive” personality and management style.

According to reports, Kelly had alienated several board members and other top executives at the bank and he was blamed for significantly reducing company morale.

Of course, his personality wasn’t the only reason for his sudden dismissal – the bank’s shares have lost about one-third of their value year-to-date.

While it'd be impossible to quantify how often this occurs, a number of well-known U.S. executives have lost their jobs for reasons other than purely performance, including such nebulous things as “personality issues.”

Steve Jobs himself was served his walking papers by Apple (the company he founded) in the mid-1980s due to his “erratic” and “temperamental” management style and his endless conflicts with chief executive John Sculley.

Carly Fiorina, one of the few female executives in the high-tech sector, was reportedly “forced” to resign in 2005 as the boss of Hewlett-Packard, partially due to her unpleasant management style and personality.

According to the International Herald Tribune: “[Fiorina] used hardball tactics to suppress the opposition of Walter Hewlett, the company's largest shareholder and the son of its co-founder William Hewlett, to the 2002 Compaq merger... Last year, when the company's struggling corporate computer division failed to meet its sales growth targets, she abruptly fired three top executives in what many people, both inside and outside the company, saw as a public hanging."

Anna N. Danielova, Assistant Professor of Finance, DeGroote School of Business, in Hamilton, Ontario, commented that Fiorina was also removed because she was thought to be “craving more publicity than she should have.”

Mark Hurd, was forced to resign from HP in August 2010 for, among other things, allegedly sexually harassing a woman named Jodie Fisher and also for certain expense-account irregularities.

Stanley O’Neal was ousted from Merrill Lynch in 2007 for a number of infractions, including his aggressive push into subprime mortgages, approaching Wachovia Bank for a merger without the board’s knowledge and also for his abrasive personality and management style.

Robert Nardelli lost his job as boss of Home Depot in early 2007, not only for losing market share and for the generous pay package he awarded himself, but also for alienating his top executives with his personality.

According to Germane Consulting, companies can incur very high costs by choosing the wrong chief executives.

Citing the phrase, “executives are hired on experience and fired on personality,” Germane estimates that the financial cost of a single failed manager can range from $1 million to $2.7 million, excluding “golden parachutes; losses related to intellectual capital, the good will of the firm’s reputation, unmet business opportunities and goals; damage to employee productivity and effectiveness.”

A few years ago, the chief executive of privately held MassMutual Financial Group, Robert J. O’Connell, was fired by its directors - reportedly because he “improperly flew on company aircraft, misused trading accounts, interfered in the discipline of his son and son-in-law, both of who were employees of MassMutual, and committed other infractions.”

O’Connell also was believed to have sexual relations with two women employees of the company.

O’Connell later sued the company for wrongful termination and eventually settled after a long and costly legal battle.

Danielova adds: “I do not think we should be sorry for most of the CEOs who were let go, because what their contacts definitely include, is their compensation in cases they are let go. I have yet to hear of any CEO leaving without being generously (compared to average employees) compensated.”